United Breweries halts beer supply to Telangana over pricing disputes

Maker of Kingfisher beer, United Breweries saw a 4% share drop following its suspension of beer supply to Telangana Beverages Corporation Limited

United Breweries Ltd, the maker of Kingfisher beer, announced on Wednesday that it has suspended beer supply to Telangana Beverages Corporation Limited (TGBCL) with immediate effect.

 

In a stock exchange filing, the company cited two primary reasons for this decision:

 

Stagnant pricing: TGBCL has not revised the basic price of United Breweries' beer since the financial year 2019-20, leading to substantial financial losses for the company in the state.

 

Unpaid dues: Significant overdue payments for past beer supplies remain unsettled by TGBCL.

 

"The continued supply of our beer to TGBCL has been rendered unviable due to these issues," United Breweries said.

 

TGBCL's monopoly on liquor in Telangana

TGBCL, a public sector entity owned by the Telangana government, holds a monopoly on the wholesale and retail vending of alcohol in the state. The dispute highlights the financial strain caused by fixed pricing and delayed payments, prompting United Breweries to halt its supply until these issues are resolved.

 

Impact of beer supply suspension

This suspension could impact the availability of beer in Telangana, as TGBCL controls the state's alcohol distribution network. This could also disrupt the supply chain and affect both retailers and consumers, especially during periods of high demand, like festivals or holidays.

 

The beer supply suspension may also impact revenue of both entities. Shares of United Breweries have already taken a hit, falling over 4 per cent to Rs 1,990.95 on the BSE, as of 2:30 pm on Wednesday.

 

TGBCL is yet to make any statement on the matter.